Utilising a customer loyalty program often brings many benefits to a business, and is simple to put into action. In addition to providing satisfaction for regular customers, there are several other benefits a loyalty program can bring, including these five:
Customer Retention
The most obvious benefit of implementing a loyalty program is that improves the chances of repeat customers. Customers will be more likely to favour your business over other competitor's, as they will want to collect points to get the offered rewards or benefits.
When your retention improves, the lifetime value of your customers does as well. This takes into account the value of the customer since the first purchase with the business, rather than focusing on their worth at the current point. By retaining customers, businesses can generate revenue from their customers over a longer period of time, which then improves their lifetime value. Overall this will then optimise your returns on the marketing investment.
Customer Data
By implementing a loyalty program, the business will be able to collect additional detailed data about their target audience. Typically, customers will share some extra information in return for any loyalty rewards. This will allow you to gain a better understanding of your regular customer base.
Marketing campaigns can be better utilised as you can group customers based on this data and target them with specific campaigns that will peak their interest.
Your loyalty program thus comes full circle: your customers give you information in exchange for rewards, and you give them what they want, along with better marketing and the products you know they'll love – which also improves your customer retention
Business Planning
A loyalty program can help you improve and plan your business strategy, along with the extra knowledge collected on your customers. Whether the information is on money spent, key demographics or customer buying behaviour, you can plan your decisions using solid data rather than estimates.
For example, assume you're thinking of starting a new product line.
The market research conducted will give you an insight of your target demographic in regards to their age, gender, location, income etc. By comparing this to what you have gathered from your loyalty program will give you an indication of whether it is a good match or if you should reconsider.
Increased Customer Purchases
Your revenue is likely to increase, as a loyalty program often encourages customers to spend more to earn more points/rewards. This can be extended further by introducing limited promotions, offering extra points on the purchase of specific products (usually the ones you want to clear from stock) or even creating a search of promotional codes throughout your website. There are several other possibilities that could be considered as well.
Extra purchases can also be generated when your loyalty program is combined with marketing campaigns. For example, running an add that offers extra loyalty points for signing up or spending a certain amount.
Competitive Advantage
Finally, a loyalty program will give you an advantage in the competitive market. The more creative you are with your businesses loyalty program, the further ahead this puts you in terms of your competitors
These are just some of the benefits offered when you implement a loyalty program.
Remember, the program must be appealing to your target audience and start it off with a bonus to get them to sign up. Once it's up and running, the program will gain momentum as more people sign up and the more promotions you run.